That's okay. Thank you so much. All right, so that's only 40.
I'm gonna do a Safe Harbor.
But we actually only have 35 minutes.
Okay.
Eric, just real quick, I wanna do a quick Safe Harbor note.
Yeah, yeah, no worries. I'll turn it to you. Okay, I know everyone is shuffling around, and we're moving around quickly between these sessions. So we're gonna get started in the interest of time, even though it looks like plenty of people are still finding their seats. It's great to have Etsy here at the conference. We have Josh Silverman, CEO, Rachel Glaser, CFO. I'm gonna turn it over to Rachel to give the Safe Harbor, then we're gonna get into the conversation. Rachel, I'll turn it over to you.
Don't worry, I'm not gonna read the whole Safe Harbor. I just wanna refer you to the Safe Harbor that's on our IR website.
Okay, there we go. That was much faster than others, and I didn't have to read it, which really bores people. So Josh, I wanna start with you. So Etsy obviously is a leading e-commerce destination, U.S., globally. Why don't you talk a little bit about the scale of the business today and how you think about driving differentiation compared to the rest of e-commerce?
Yeah, great. So for those of you who aren't familiar, Etsy is a two-sided marketplace where you can buy things that are made by or designed by the maker. When Rachel and I arrived at Etsy in 2017 , the conversation was, Etsy feels like it's about as big as it can be, and we're terrified about competition, particularly Amazon Handmade. And it feels a little bit like 2017 all over again because here we are, and the conversation about Etsy is: Is Etsy as big as it can be, and how are you gonna face competition? Well, back in twenty seventeen, we were doing about $3.3 billion of gross merchandise sales. Last year, we did $12 billion of gross merchandise sales.
In 2017, when people thought we were about as big as we could be, we had about $440 million of revenue. In 2023, we had $2.6 billion of revenue, and we are fortunate to have a wonderful financial model, where a lot of that revenue flows through, and we have always been focused on efficiency. Every year has been a year of efficiency for us at Etsy. So, we had about $80 million of EBITDA in 2017. That was about $750 million of EBITDA in 2023. How have we been able to grow so much? Because we do something that's genuinely different than what everyone else does.
There is a race to the bottom happening where, you know, Amazon and Temu and Walmart and others are all effectively selling the exact same product, typically made by the same mass manufacturer, and they're just competing for who can sell it two cents cheaper or ship it two hours faster, and at Etsy, you have the chance to buy something that's actually made just for you that comes with a story, where you're connecting with the maker themselves, and that is an opportunity that we believe is enormous. You know, and if we think about, o bviously, Etsy was a massive gainer during the pandemic. I think we might have had more tailwinds than anyone during the pandemic because, at that time, you simply couldn't find things anywhere.
You couldn't buy offline, and even if you wanted to shop online, most places were out of stock. Their goods were stuck on a boat somewhere, trying to get here from China, and you couldn't spend in restaurants, you couldn't travel, and the government is pouring stimulus money into your pocket. So a lot of that money found its way to Etsy, and we gained tens of millions of customers. I'm proud to say Etsy is just about as big today as it was at the peak of the pandemic when we had all of those tailwinds, and the reason is, tens of millions of customers came to Etsy because they had to during that period.
And now, when we have all the macro headwinds that I'm sure we're all spending time talking about, and you're more than familiar with, people come back to Etsy again and again now because we truly offer something different, something special and meaningful, and I think that's an enormous opportunity with a ton of runway still to go.
Okay, I wanna follow up on something you've talked about, Josh. You've talked about four key strategic pillars for Etsy:
Yeah.
Consideration, quality, value, and reliability. Maybe anchor around those pillars.
Yeah
And talk about some of your key strategic priorities to deliver on those pillars.
So if we start with consideration, when you go talk to Etsy shoppers, and now, by the way, Etsy is the second most popular pure-play e-commerce site in America. Only Amazon has more unique buyers than Etsy. But if you look at purchase days per buyer and GMS per buyer, we have a lot fewer than Amazon or, or eBay or several others, so there's an enormous opportunity there. And when we talk to our buyers and say: Hey, why haven't you shopped on Etsy more often? The answer again and again is, I didn't have a need. And what that means is they don't understand all the things we can do for them. So there are several big areas we have been leaning into. One is gifting, and I think we'll talk more about gifting, but that is a perfect opportunity to be shopping on Etsy.
We have so much that we can offer to customers in the gifting experience. Only half of our customers who bought with Etsy last year bought a gift, only half, and most of them bought just once a year. There's so much more gifting opportunity there. Another very big opportunity is we have made Etsy, I think, over the past seven years, really great. When you come to Etsy and you know what you want, you haven't been able to find it anywhere else, we almost for sure have it. At Etsy, we get you to it, and we make that process very clean. We have an enormous opportunity to help you figure out what it is that you want. I am planning a wedding. I just had a baby.
I'm remodeling my home. Those are use cases that we have not been great at, taking a very high level and helping you figure out all the things we can do for you for a wedding, all the things we can help with your Halloween party. So I think that's a huge opportunity for us in consideration. And another big opportunity, and it's been a big focus of ours this year, and I expect will be next year as well, is app penetration. I think we'll talk a little more about that. But only about 45% of our buyers have the app. Our app penetration is much lower than many of our competitors. We find that purchase days go up by about 75% when we get people on the app, and we think that we have a big opportunity to drive a lot more app penetration.
So those are three examples of where I see a lot of opportunity for us in consideration. Another very big focus of ours has been quality. When we think about Etsy's differentiation versus everyone else, buying something beautiful, something unique, made just for you, making sure that the thing that you're buying is really the best possible version of that, and that you understand the human behind the product you're buying, is a very big focus of ours. We just launched, last week actually, a pretty significant update to how search works at Etsy, where historically, search has worked based on relevance. You tell us what you want, and we find the items you're most likely to buy. We've added a Q Score, quality score, now.
So at Etsy, we typically have a thousand highly relevant items, and to decide which ones earn their way to the top of search, we've now shown sellers a dashboard. Here's how we rank the quality of your items, and here's how we rank the quality of your service. And the way to earn more visibility in search is to do better on things like making sure you always ship on time. Do you always answer customer queries quickly? Do you always get five-star reviews? Is the quality of your photography high? And in creating a race to the top dynamic, where you earn better visibility and search through better quality, we think we can really continue to uplift the experience at Etsy and make sure that we delight customers even more.
We're also launched a big marketing campaign and are doing a lot more to center the seller's role in the making process. So you really understand, did this seller make it with her own hands? Did she design it and then produce it with a production partner? Did she curate it, meaning the vintage items on Etsy, but what role exactly did she play? To really help people understand the differentiation of Etsy. That goes hand in hand with reliability. We've said we expect to cut at least two days off of shipping time on Etsy this year. We've launched Etsy Purchase Protection to make sure that on the rare occasion, something goes wrong, we have your back.
We've done a lot to make sure that the buying experience on Etsy is very safe and very reliable, even though, unlike our competitors, we don't run warehouses, we don't have all that capital expense. We're still able to very reliably provide on-time shipping and make sure that customers are consistently delighted. That last pillar you mentioned is value. There's two sides to value. One is discounting. It's what everybody else is doing, right now. We did a lot in 2023 to launch more discounting tools so our sellers can put items on sale and manage those sales effectively, and I think we do a reasonably good job of that right now. Etsy's not gonna win by being the cheapest version of consistently or always being the Blue Light Special , nor should we. That's not our brand.
So actually, as we think about value, leaning into quality, making sure people understand the role of Etsy and the role of the seller and how we're different, it's actually a really important part of the quality equation at Etsy. So we've made an enormous progress against those pillars this year. I feel really great about our customer experience heading into this fourth quarter, that it's gonna be even better and substantially better than it was at this time last year.
Okay, there's a lot to mine in there, so I want to stay with you, Josh, and focus on some of those finer points. Maybe turning to search first.
Yeah.
You know, you've improved the search experience. We talked about it still being a focus area going forward. Talk about some of the low-hanging fruits you still see around search.
Yep.
And how to think about the focus on that and fitting back into quality, and quality as a variable for the platform.
Great. Thank you. So, you know, the way our search engine has worked historically, you type in a search for something. We have the first pass of search is retrieval. We'll retrieve, let's say, 5,000 items that are highly relevant. By the way, there's a 120 million things for sale on Etsy, 120 million. So we have a tyranny of choice challenge. How do we show you the very best presentment? Typically, people will view 30 to 40 items in total in a search result, so 30 out of a 120 million. So the first thing we'll do is we'll say: What are the 5,000 items or so items that are most relevant? Then we've had the second pass of ranking, which ranks from one to 5,000 . What are you most likely to buy?
Each space in that search has been allocated based on likelihood to buy. So we've just done some very significant upgrades, as I said, to really add a Q Score and actually, not just what are you most likely to buy, but what purchase are you most likely to love? Which is a very important change to search. But another big change we made that we talked about in the second quarter, and we're continuing to make significant progress on, is showing really good diversity across search. What we've seen historically is it's not uncommon to have 10 spots in search of 30 or 40 that are all the same seller. Why?
If one seller has done a great job proving that she converts visits to sales really well, she might have 1,000 listings, and 30 of those might be very relevant to this one search query. So our search engine might decide that ten of her items are 10 of the 30 most likely things to sell. Makes sense for that black box algorithm, but it's a bad customer experience because you're not really seeing a lot of diversity. Why am I seeing the same seller over and over again? So last quarter, we made some significant changes to make sure that one seller very rarely gets more than two or three spots in search.
Just in the past weeks, we've actually continued to upgrade our sameness algorithms to make sure that there's more and more diversity in search, that items that look similar, only one of them, only the best of them, can earn a spot, so people can see the real breadth of Etsy. Not only do we think that's gonna lead to a better buyer experience in this visit, but it's gonna show you more of what we have on offer to make you want to come back more often. So I think there's a very significant amount of opportunity in search. The other area that we're really leaning into is discovery, and what I mean by that is, about half of the search queries we get at Etsy are very nonspecific, gift for mom or ring.
We have a lot of rings for sale, you know, hundreds and hundreds of thousands of different rings for sale. So taking people to, oh, do you want, w e just launched, actually, using LLM in the past weeks, some technology that looks at all of our search results and says, what are things people would naturally want to filter on? So, for example, are you interested in statement rings or stacked rings? Are you interested in Art Deco style or more of a modern style? And can automatically, based on the search results we're seeing, be able to classify and make sense of these search results in a way that can take people from very broad to very specific. The opportunity for us in GenAI, I think, is bigger than almost anyone in e-commerce, and the reason is our inventory is so vast, and it's all snowflakes.
It's every single thing is unique, and because of that, the opportunity for assistance to help you get to exactly the right thing that's personalized for you is incredibly powerful, and I think we're at the very early stages of unpacking that.
Okay. Maybe following up on another theme you introduced. You've introduced gifting as a platform. Talk a little bit about some of the early learnings from gifting going live and some of the work you had to do to put gifting in place as a platform.
Yeah, great. So, first, we think gifting is a huge opportunity. We think just in the U.S., just online, and just in the categories of gifting for which we compete, it's about a $200 billion opportunity. The average American spends about $1,600 on gifts per year. We think we currently have about 1% of that, and we think Etsy is particularly well adapted to win at gifting. When you're giving a gift for someone else, it's high stakes. You want it to express your care for them. You want it to be thoughtful. Many people, myself certainly included, don't feel great. We don't feel confident as gifters. In fact, men surveyed, about 75% of men say, I don't feel confident in gifting, and the women in their lives, 85% of the women say the men are bad at gifting.
So not only are we not good gifters, but we shouldn't feel like we're good gifters.
That's a strong data signal, is what we call that, yes.
We have every reason to believe we're not good at gifting. We need help.
Yeah, you know the distinction between a statement ring and a stacked ring, so that you're ahead of the game, Josh.
The ML team was briefing me just yesterday, and I learned the differences. They were showing me some of the improvements we just made. But so we think we've got a great opportunity to really win at gifting. We also think buying for someone else is really different than buying for yourself. You know less about the person you're buying for, so we have a real opportunity to say, just tell us one or two things about them, and we will show you some really unique, really compelling ideas about them. We also know that there's high stakes around will it arrive on time, and we think we can make the fulfillment experience a lot better, so we've used a lot of GenAI techniques to create persona and help create a gift finder experience that we think is uniquely compelling and uniquely fun.
It's called Gift Mode, and I would highly recommend folks go check it out. We also have worked on the fulfillment experience, so even if the birthday is tomorrow, when you buy a gift on Etsy, you have the opportunity to have a voice or video message from you to the recipient saying, I just bought you something on Etsy. You're gonna love it. It's amazing. Happy birthday. We will send that message on the birthday, even if the gift isn't gonna arrive for a few more days. You can decide whether you want the gift reveal to happen at their birthday or let keep the surprise for when the gift arrives. We're working all the way through the gifting process to design something from soup to nuts that we think is really compelling.
In the second quarter, we announced that we grew gifting overall at Etsy at about 5%, even while GMS overall on the site was down about 2%, so significant outgrowth in gifting. On Mother's Day, Father's Day, and graduation, we showed our growth rates, which were very significantly ahead of what the National Retail Federation said was happening in the market. We think that we are seeing real green shoots, that the investments we're making in gifting are paying off.
Okay. The other opportunity that's been talked about with the company is moving more into loyalty. So you've introduced Etsy Insider in mid-September. Talk a little bit about how you want to position that as a loyalty offering against what you see as the market opportunity across the platform.
Yeah, people love Etsy, and when we've asked. A re you interested in a loyalty program from Etsy? Absolutely. They say they're definitely interested in it. And again, when we go back to consideration, people love us. They just don't always know when to think of us. So we feel like by launching a paid loyalty program, there's a notion that since I'm paying for this, I really should be getting the best value out of it. Maybe I should start my searches more often on Etsy, and we know that if you're willing to give us a shot, we have what you want, a surprising percentage of the time. When we've asked buyers what they're interested in, free shipping looms large, no doubt, and it's something a lot of people are very interested in.
We've often wondered what would happen if shipping prices went away on Etsy. We are launching in beta. Actually, the invites go out today, an invite-only beta of a loyalty program called Etsy Insider. The first invitations are launching literally as we speak, and it's a paid membership program, which offers a set of emotional and rational benefits. The core rational benefit is free shipping. Emotional benefits are things like deals and drops, early access to new product releases, and we're really excited to see how that program can go. We're limiting it. The invites will primarily go to occasional shoppers. These are people who shop maybe two to six, eight times a year, because we're really particularly interested in seeing what happens with their frequency as part of this program. What do adoption rates look like?
What do churn rates look like? And I'm sure we'll evolve as we go, but I do think there's a big opportunity for Etsy in the loyalty space, and we're excited to test and learn our way there.
Okay, one more area, I want to talk about with you, Josh, before I bring Rachel into the conversation, the mobile app experience.
Yeah.
Can you talk about some of the key investments you're making around mobile app, and how you're thinking about the user experience and the potential for mobile app to change in the years ahead?
Yeah. The way that we've run Etsy over the past 7 years, we've been exceptionally focused on accountability in a lot of the best of ways. So every squad is accountable to how much extra GMS can they unlock through the work that they're doing. And it's intellectually elegant and rational, and I've loved it. It really incentivized velocity. If I'm an engineer at Etsy, a product manager at Etsy, what's the fastest way for me to come up with an idea and test it? That is typically on the web. And so the result is that most of our experimentation effort, most of our product development effort, has actually gone to the web because it's the fastest way to get velocity.
So the result is we're improving our mobile web experience to be great, and the things that work, we're porting onto the app. And yet, when we pull back and look, our app users are our best users. When we get someone onto the app, you know, as I said, purchase days go up 75%. We see a ton of value in getting people on the app, and we have a direct voice then, a direct channel, when we speak about consideration, to get them coming back again and again. So we're really shifting our product focus to make sure that the app experience is the marquee experience on Etsy, and to begin to invest a lot more in driving app penetration.
Of course, we've marketed the app on mobile web before, but we can do it more loudly, and we candidly haven't had a very big investment in things like app store optimization, app store marketing. We've done hardly any paid app marketing campaigns. So we're in the early stages of really understanding how to drive a lot more app penetration, and I think it's gonna be very fruitful. We are also doing some selective hiring on the app to make sure that we have the capacity to be keeping up the wonderful velocity that we have around product experimentation, but have that velocity pointed at the app and not just at the web.
Okay. Rachel, let's bring you into the conversation. International, cross-border, they both remain very large opportunities for Etsy. Can you talk about some of the more recent progress you've made in the international markets and some elements of how growth in international buyers might be impacting the platform?
Yeah. So, just to set the table with international, we think international is a tremendous opportunity. We've put out a stat a few times that we say that the next 15 markets after the U.S. and the U.K. are only eight- are less than 80% as penetrated as the U.S. and the U.K., so enormous opportunity amongst G10 and other markets. But they are experiencing headwinds as the U.S. is. So in the second quarter, we did see about a hundred basis points of sequential growth between Q2 and Q1, and when we looked year over year, we saw that the, w e were essentially flat. In Q2, the macro headwinds we're seeing in the second quarter, there were a lot of mind share shifts.
If you recall, there was three major sporting events taking place in Europe at the same time as there were elections and a lot of economic stagnation in those markets. So we were almost flat. I think we were down about 0.4% in Q2 year over year. Meanwhile, we're investing in the key partnerships for cross-border to make that much simpler and easier to get things out of some of those markets into other parts of the world.
So we did a strategic partnership with a cross-border partner in Turkey, where we have tremendous supply from really excellent sellers, and you can order something from a Turkish seller and get it almost as fast and almost as inexpensively as you can from the seller that's down the street from you. And we're also investing in the feeds so that we can invest in our performance marketing channels in an ROI-positive way, not a one-size-fits-all approach, but the feeds being very specific to the country that they're in, so that we're getting a lot more efficacy with our spend in a lot of countries in Europe.
Okay. Probably one of the biggest investor questions we get is just around the long-term growth algorithm for Etsy. Why don't we take a step back and just help share with us, Rachel, your view on sort of the structural GMS opportunity that sits in front of Etsy?
Yeah, so, I mean, I love this question because we were about $12 billion in GMS last year in the Etsy core marketplace, and we're in a TAM that we have, there's lots of ways to slice it. At its largest aperture, it's $2 trillion. When you boil that down to just the online pieces of the categories that we're in, it's about $500 billion, and Josh mentioned earlier, gifting alone is about $200 billion. So there's no limit. I mean, we are not constrained by the market that we're playing in. There's tremendous opportunity for growth, and you know, we don't invest, we don't have a growth at all cost mentality.
We invest where we see the return is there, and Josh laid out a number of places that we're investing organically, and I can go into those more in a moment. But right now, and we have, as he also said, very high flow-through of revenue to EBITDA, so we have and enjoy a really nice model that we're in, that we have very high margins, I think probably among the highest in the industry, where we can invest for growth. We see a lot of opportunity for us to continue to grow.
Okay. Maybe following up on growth opportunity and looking at it through a different prism, is that away from the demand question we get a lot, the other is the competitive intensity, so maybe, Rachel, can you talk a little bit about the competitive intensity you're seeing in key markets, and how you think about balancing growth and profitability against the competition you see?
Yeah, and I, you know, we've gotten this question a lot. There are some new entrants, and people seem to be hyper-focused on the new entrants. But the truth is, we've been competing amongst e-commerce since the day the company was born. In fact, I think shortly before Etsy went public, one of the large e-commerce players announced their own version of handmade, and we still have continued to thrive and grow in, you know, 120 million listings, 7 million sellers now, up from 2 million sellers when Josh and I started in the company, and I think something like 25 million listings. We've just continued to grow. We are more than double the number of active buyers than we were before in, I guess, back to 2019, before the pandemic.
The competition is out there, yet we have a very differentiated offering. I mean, it's very hard to think of a competitor that's exactly like Etsy. There might be a few, maybe an eBay or whatever, but nobody really has the artisanal and vintage offerings at scale like Etsy does. So we're always gonna be competing against people that wanna shop. There's always gonna be other places for people to shop. But I think what has become more competitive is the fact that we're at the discretionary end of a discretionary sector, and when the dollars in the wallet become increasingly more constrained, as we are right now, that becomes highly competitive.
When people are saving their dollars to buy milk and gasoline and pay their rent, and the amount that they have left over, there's just a, you know, an ever-smaller slice of the pie left for the discretionary players, and I think that's the uphill battle we've been fighting in the last year or two.
Okay. Maybe, Rachel, just bring it to take rate. Obviously, take rate is always a balance of trying to drive value to sellers and how that journey between seller value and the services continues to evolve, and talk a little bit about advertising as a potential key driver for take rate over the medium to long term.
So first of all, we always talk about this fair exchange of value. We do have about a 22% take rate. It's grown pretty much every year since I've been in the company. Sometimes it grows because of an outright fee change. When we started, the mandatory transaction fee was 3.5% of every sale. It's now 6.5% of every sale, so we've had two fee changes. Sometimes it grows because we've added a new product. For instance, Etsy Payments has expanded from non-existent to now almost 99% of the GMS that flows through Etsy flows through Etsy Payments, and we get a fee for that. We've added Offsite Ads, and we've expanded Etsy Ads. Now, Etsy Ads, we used to call it Promoted Listings.
It's been around for quite a while, but because we've continued to make the product better and better every year, we've been able to grow the amount of revenue that we get, but at the same time, it's benefiting the sellers. And what that is is the seller using part of their budget to get greater prominence in the search results. The better that product for them, the higher their return, but also the higher CPC that we can charge. So we've continued to make the search results on an Etsy ad of increasing relevance. So those search results are as good as the general search results, and everybody gets their fair share of that. We don't really even have to do much more adding to that product because the sellers give us more budget than we can utilize.
We police ourselves. We won't spend it unless we can give them a minimum return on ad sales. So the better we can make the product in the search algorithm, the more money we can take and still give them that same high return and utilize more of the budget they've already allocated to us. So that's an example of increasing the take rate. We don't think there's any kind of limit to how or where take rate can go. As long as we think we can return value to the sellers, we're open to those ideas. And you can look at any other marketplace rate card and see the things that we are offering versus what others are offering, and there's lots of places to go where we're not currently offering products, and you could see us, leaning into any of those areas in the future.
Okay, sticking with what you said, Rachel, and building upon Josh's earlier answers, maybe leave us with the sense of what you see as the key strategic investments that the company's making at this point in time when you think about the evolution of product platform.
Yeah, so let me talk about organic investments, which by far is the highest and best use of our capital, is to invest in the marketplace so that it can grow. We also make return of capital investments. I can talk about that in a bit. And I think about the investments in five buckets. So there's investments in the product, which is mostly people. There's investments in marketing, there's investments in the apparatus that makes us be able to develop faster and serve traffic efficiently. There's public company and compliance investments that we are required to make just to be a good citizen in the corporate world. And now I'm forgetting my 5th one, but there is a 5th one in there. And I'll come back to it in a moment.
In product, Josh talked a lot about what we've invested in quality and what we've invested in search, what we've invested in gifting. Two that I think are kind of new that are important investments for us are investments in our app, which we call Buy on Etsy. Internally, we call it BoE, and that's both in how we market the app and how we develop the app, so it's an even greater experience. And then, as he said, the Etsy loyalty, that is an investment which just launched today because you could see it over-indexing on people that already shop a lot, buying, you know, buying in for the free shipping, and then it tips upside down.
So we're really balancing how much to invest, and the idea is to get frequency to grow, and that's why we're doing it only as a beta right now in a very limited way. That's product. Marketing, we invest with an ROI lens. We've talked extensively about that ROI lens, and we invest both in performance and in above-the-line linear television, as well as some of the OTT channels as well. And now we've been able to lean more heavily into paid social, which we've gotten that to be at a good place as far as ROI and efficiency.
We're investing in ML, and we're investing in our cloud serving, and those are very important investments that don't have a shiny product to point to, but those are very important investments for us to be able to develop faster, to develop more innovatively, to be able to give a much better customer experience. We're always looking for efficiency in our G&A areas, but are necessary to support global growth.
Okay. Josh, I want to turn back to you. You've seen a lot of operating momentum around Depop. Can you talk a little bit about some of the decisions you've made around talent and product that might be yielding some of that growth we're seeing today?
Yeah. So Etsy owns another marketplace called Depop, which is a marketplace where people can buy and sell clothing. And it is seeing tremendous growth, particularly in the U.S. right now. And it makes sense if you think about the macro we're in, the opportunity to buy cool clothing at a really good price, 'cause it's lightly used, is a great value prop right now. And the opportunity to earn a little extra money by selling the clothing you already have, it's just doing fantastic. And we bought a good platform with a good brand, but we injected some key Etsy talent there. So Kruti Patel Goyal is the CEO there. She was our chief product officer at Etsy. Rafe came over.
He was a senior engineering leader at Etsy, who came over to Depop to help Kruti run the platform. Along with a very talented group of people that were already at Depop, I think they've been able to unlock a ton of value, in large part by executing the Etsy playbook that we've been running at Etsy at Depop. So making search a lot better at matching buyers and sellers and really driving value right now. So coaching sellers about what's the right price to list these items at has a real virtuous flywheel going in that business right now. It's been a tailwind to our overall GMS growth, and it's been really delightful to see.
Okay, last one for you, Rachel. We talked about investments, capital allocation priorities from here. How should investors think about even the potential for equity returns against those broader capital allocation priorities?
Great question. We have a $1 billion share repurchase authorization from our board. There's about $416 million left on it. In 2023, we returned about 90% of free cash flow to shareholders on average. I think in Q1, we were over 100% return of capital to our shareholders. We did say for a long time, we were buying back to offset the dilution created by the equity that we grant to employees as part of their compensation. But about a quarter ago, we modified that to say, and because of the share price trading below what we believe our intrinsic value is, we're also buying back opportunistically, which is why we've increased the amount, the rate of share repurchase.
Okay, Josh, we've got about a minute left. Leave us with a fine point on the broader conversation we've had today. What are you most excited about with respect to Etsy when you look out over the next three to five years?
First of all, I see tremendous opportunity to make the customer experience at Etsy better. I constantly get asked about low-hanging fruit, and I feel like we are making tremendous gains, making the buying and selling experience on Etsy lots better. ML is playing a big role in that, no doubt, and I believe we will continue to see consolidation in e-commerce. People can only remember a few brands, and we have a whole bunch of e-commerce players out there right now that are literally selling the exact same product produced from the exact same factory. They're just trying to sell it 2 cents cheaper or ship it 2 cents faster. Etsy does something genuinely different.
We have a brand that is beloved by tens of millions of people around the world, the substantial majority of whom come to Etsy for free because they know us and love us. We can only remember a few brands. We're busy people. We can only hold a few brands in our mind, and if commoditized commerce is over here, and you're choosing between Amazon and Walmart every day, you're desperate for an alternative. There's no one better positioned than Etsy to be that alternative. That is a huge opportunity. I think we're very well positioned to win, and I think we're gonna continue to do better at it.
Okay, Josh, Rachel, really appreciate the conversation. Thanks so much. Please join me in thanking Etsy for being part of the conference this year.
Thank you.
Thanks, Eric.